China Sends Brutal Warning to US After Trump Set to Impose 100% Tariffs

Markets plunged. Investors panicked. And across the Pacific, two economic superpowers locked eyes in what could become the most expensive game of chicken in modern trade history.

Beijing has delivered a stark message to Washington: back down or face consequences. China’s Ministry of Commerce fired back at President Donald Trump’s threat to impose 100% tariffs on Chinese imports, declaring the country is not afraid of a trade war and will take resolute measures to protect its interests.

What started as a dispute over rare earth minerals has morphed into a high-stakes confrontation that threatens to upend global supply chains, crater financial markets, and test whether either superpower will blink first.

China Fires Back at Trump’s Tariff Threat

China pulled no punches in its response to Trump’s latest salvo. A Ministry of Commerce spokesperson accused Washington of operating under a textbook double standard and rejected what it called willful threats of high tariffs.

“China’s position on the trade war is consistent: we do not want it, but we are not afraid of it,” the ministry stated, according to state news agency Xinhua.

Beijing pointed out that America’s Commerce Control List covers more than 3,000 items, while China’s Export Control List of Dual-use Items includes only around 900 items. Officials argue this disparity reveals hypocrisy in U.S. accusations of economic coercion.

China promised countermeasures without specifying exact details, though officials described them as necessary passive defensive actions in response to what they view as American aggression. Beijing insists it has been pushed into this position after months of escalating U.S. restrictions.

Trump Announces 100% Tariff Hike and Software Export Ban

Trump dropped his bombshell announcement on Truth Social on Friday, October 10, sending shockwaves through global markets. Starting November 1, Chinese imports will face an additional 100% tariff on top of existing levies. He also plans to impose export controls on any and all critical software.

Trump accused Beijing of taking an unprecedented position designed to hold the world hostage. His post framed China’s rare earth restrictions as an act of economic warfare that demanded immediate retaliation.

Critics note Trump timed his announcement strategically. November 1 falls just two days after his planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea. When asked about the timing, Trump told the Financial Times: “We’re gonna have to see what happens. That’s why I made it November 1.”

Whether Trump actually meets with Xi remains unclear. He initially threatened to cancel the summit but later hedged, saying he would attend regardless and might still hold talks with his Chinese counterpart.

Rare Earth Minerals Become Beijing’s Trump Card

Rare earth minerals sit at the heart of this confrontation. These 17 elements with exotic names like holmium, erbium, thulium, europium, and ytterbium sound obscure, but power everything from smartphones and electric vehicles to military hardware and renewable energy technology.

China controls roughly 70% of the global rare earth supply, giving Beijing enormous leverage in any trade dispute. On Thursday, China announced sweeping new export controls that require foreign companies to obtain licenses before exporting products containing even small amounts of Chinese rare earths.

Beijing now prohibits cooperation with foreign companies on rare earth technology without prior government authorization. Applications for items that could serve military purposes face automatic denial. Even civil use applications for research related to certain computer chips or artificial intelligence with potential military applications will receive approval only on a case-by-case basis.

China insists these controls represent legitimate measures under international law, not export bans. Yet the restrictions effectively weaponize Beijing’s rare earth dominance at a moment when U.S. industry desperately needs these materials.

Pentagon Scrambles with $1 Billion Mineral Stockpile Push

Behind closed doors, American defense officials had already seen this coming. Public filings from the Defense Logistics Agency reveal the Pentagon launched a sweeping $1 billion program to rebuild mineral stockpiles and reduce reliance on Chinese supply chains.

Specific deals paint a picture of urgency: $500 million for cobalt, $245 million for antimony through U.S. Antimony Corporation, $100 million for tantalum from a domestic supplier, and $45 million for scandium from Rio Tinto and APL Engineered Materials.

A former defense official told the Financial Times this represents an acceleration of America’s mineral buildup, moving far faster than previous efforts. Stephanie Barna, a lawyer at Covington & Burling, warned that Chinese control over these minerals “would have a direct, palpable and adverse effect on U.S. ability to field the kind of high-tech capabilities needed for any strategic competition or conflict.”

Trump’s One Big Beautiful Bill Act allocated $7.5 billion for critical minerals, including $2 billion specifically for the national defense stockpile. Pentagon officials plan to spend these funds by late 2026 or early 2027.

Yet any American effort to increase domestic sourcing and processing will take years to bear fruit. Until then, Beijing retains enormous power over supply chains that underpin both national security and economic competitiveness.

Wall Street Loses $2 Trillion in Single Day Panic

Financial markets absorbed Trump’s announcement like a body blow. On Friday, the Dow Jones Industrial Average plummeted 879 points, dropping 1.9% as investors fled to safety. Roughly $2 trillion in equity value evaporated in a single trading session.

Dow futures indicated another 887-point drop before Monday’s opening bell, suggesting the pain was far from over. Britain’s FTSE 100 fell almost 1% as Trump’s threat sparked a late selloff in London. Bitcoin tumbled 8% before recovering 4% on Sunday after China refrained from immediate retaliation.

Michael Brown, a senior research strategist at brokerage firm Pepperstone, called the tariff threat “a rather unwelcome development for financial markets” after investors had “by and large moved on from the trade and tariff story.”

Brown identified the central question keeping traders awake: Is Trump’s threat credible, or does it represent another example of his “escalate to de-escalate” strategy? Earlier this year, Trump repeatedly floated outlandish tariff figures as negotiating tactics, using extreme positions to extract concessions before settling on more moderate terms.

Beijing Hits Back with Port Fees and Qualcomm Investigation

China responded with targeted countermeasures designed to inflict maximum pain on specific American industries. Starting October 14, Beijing will charge new fees on U.S. vessels docking at Chinese ports, directly mirroring American charges on Chinese ships set to take effect the same day.

China also launched an antitrust investigation into U.S. tech giant Qualcomm over its acquisition of Israeli semiconductor company Autotalks. Beijing claims Qualcomm failed to inform China’s State Administration for Market Regulation about the deal.

Officials framed these moves as defensive responses to American aggression rather than offensive attacks. Yet the message comes through clearly: for every action Washington takes, Beijing will respond in kind.

Both Sides Leave Door Open Despite Tough Talk

Despite the harsh rhetoric, neither side has completely slammed the door on negotiations. Trump posted on Truth Social Sunday night: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”

Vice President JD Vance appeared on Fox News Sunday urging Beijing to “choose the path of reason.” He warned that “the President of the United States has far more cards than the People’s Republic of China” but left room for compromise if China acts reasonably.

When reporters asked Trump about the tensions as he headed to the Middle East on Sunday, he appeared to soften his stance. “You know for me, you know what Nov. 1 is? It’s an eternity. Nov. 1 is an eternity for me,” Trump said, suggesting the deadline serves primarily as a negotiating tool rather than a firm commitment.

Goldman Sachs Sees Negotiating Theater, Not Trade War

Wall Street analysts increasingly view the current tensions as performative rather than permanent. Goldman Sachs economists, including Jan Hatzius and Andrew Tilton, wrote that while recent policy moves suggest a wider range of potential outcomes, the most likely scenario involves both sides pulling back on aggressive policies and extending their tariff pause.

Some observers openly mock the theatrics. A former U.S. official dismissed Trump’s delayed enforcement date as a “mega Taco,” slang for “Trump always chickens out.”

Geoffrey Gertz, a former Biden-era National Security Council official, told Politico that China is demonstrating capability without actually cutting off exports. “China’s not saying they are absolutely cutting off all exports right now, but they are saying they have the ability to do so if they want to and that will be the background condition for U.S.-China negotiations,” Gertz explained.

Lyall Taylor, a portfolio manager at Singapore-based Wealth Management Alliance, noted that “Trump’s knee-jerk additional tariffs of 100% don’t come into effect until November … a deliberate delay which gives time for the parties to sit down and do a deal.”

November 10 Deadline Looms as Truce Expires

Both countries currently operate under a temporary truce reached in May that brought tariffs down from catastrophic levels. American tariffs on Chinese goods dropped from 145% to 30%, while Chinese tariffs on U.S. products fell from 125% to 10%.

Yet that truce expires on November 10, just over three weeks away. U.S. Trade Representative Jamieson Greer told Fox News that China’s export curbs represent a power grab that won’t be tolerated, but he added a caveat: “these measures aren’t in place yet, the tariffs aren’t in place yet. It’s scheduled for Nov. 1. So I think we’ll see the markets calm this coming week, as they see things settle out, hopefully.”

Whether Trump and Xi actually meet on October 29 in South Korea could determine whether tensions escalate or defuse. So far, China has remained silent about the planned summit.

Winners and Losers in Trade War 2.0

Early evidence suggests Chinese manufacturing has proven resilient despite existing tariffs. China’s exports rose 8.3% in September compared to a year earlier, up from 4.4% growth in August and exceeding analyst forecasts of 6%.

Yet American farmers have suffered. China effectively froze new orders of U.S. soybeans, causing exports to tumble more than 50% in value this year. Beijing also failed to renew approvals for hundreds of U.S. meat exports in March, creating a de facto ban on American beef.

European companies find themselves caught in the crossfire. U.K.-based chemical company Ineos announced it would close two production units in Germany and cut 20% of its workforce in England, blaming dirt-cheap carbon-heavy Chinese products for pricing out European producers.

As November deadlines approach, markets, industries, and governments wait to see whether this latest confrontation represents genuine economic warfare or just another round in an ongoing negotiation where both sides ultimately need each other too much to risk total rupture.